February 28, 2012

China XLX Fertiliser's 2011 revenue rises 29% on-year

China XLX Fertiliser Ltd. reported the financial results of the company and its subsidiaries (the "Group") for the twelve months ended December 31, 2011 with revenue rising 29% on-year.

During the said period, the Group's revenue rose 29% on-year to RMB3.69 billion (US$0.59 billion), mainly buoyed by increased sales volume of urea and compound fertiliser and improved average selling prices of urea, methanol and compound fertiliser. Gross profit was RMB506 million (US$80.33 million), up 39% from the preceding year. Net profit attributable to owners of the Company reached RMB181 million (US$28.73 million), an increase of 25% on-year.

Commenting on the Group's results, Liu Xingxu, Chairman and CEO of the Group, commented, "China saw a bumper grain harvest last year, with output growing by 4.5% on-year to a record high of 571.21 million tonnes under the government's supportive measures. Nevertheless, the domestic urea industry was buffeted by market imbalance and the government's tightened export policy. In a market environment that is highly competitive, volatile and dynamic, we have steadfastly maintained our core focus on improving efficiency, lowering costs and boosting operating efficiency."

In 2011, revenue from urea sales was approximately RMB2.41 billion (US$0.38 billion), up 29% on-year mainly due to an increase of 21% in average selling price of urea and 7% in sales volume. The full year gross profit margin of urea improved 0.5 percentage points on-year to 16.9% because of higher average selling price resulting from the 3Q peak season and tight inventory levels due to low industry production utilisation rates in 1H 2011.

Compound fertiliser revenue soared 43% in 2011 over that in 2010 to RMB849 million (US$134.77 million). The increase was mainly attributable to an 18% on-year growth in sales volume due to a gradual shift in product mix towards compound fertiliser due to better profitability. The average selling price of compound fertiliser rose 21% on-year, leading to a on-year increase of 3.6 percentage points of its gross profit margin to 15% in 2011. Improvement in average selling price was mainly due to factors similar to that for urea, including the 3Q seasonal peak and low inventory levels.

Methanol revenue rose 10% on-year to RMB422 million (US$66.99 million) as average selling price edged up 16% on-year. Nevertheless, its sales volumes eased 6% on-year due to weak downstream domestic demand. The gross profit margin regressed to -6% from -3% in 2010 as higher coal and electricity prices expanded cost of sales by about 20.4% on-year, leading to a continued loss from this business segment.